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Risks of Misclassifying Exempt Workers (03/29/12)

The U.S. Department of Labor has estimated that nearly 70% of employers are not in compliance with the Fair Labor Standards Act. In 2010 alone, it set aside $25 million for an enforcement crackdown, adding 350 FLSA investigators with the goal of seeking out employers that commit wage and hour offenses—particularly exemption misclassifications.

The goal of DOL’s efforts is to get employers to create compliance action plans to address employment law compliance. DOL is considered likely to propose a rule that will require covered employers to notify workers of their exemption status and perform a classification analysis on workers classified as exempt. To be in compliance, employers covered by the Wage and Hour Division need to develop written plans for identifying wage and hour violations, create a process for implementing the plan, and test the process for compliance.